Bridging finance is most commonly used to bridge the gap when you have bought one home before selling your existing home. During this period, you still need to pay interest on your existing property – until the home sells.  

Whilst the banks may assist if you have sold your home unconditionally, this is not always the case. Some clients require a closed bridging loan where they have a definite settlement date and a new home purchase. While others require a more flexible open bridging loan, where there may not be any offers on their existing home, and they need assistance for an unknown period.  

Bridging finance is also a temporary fix if you have issues with your current lender’s criteria when looking to subdivide your property, build on your rear site or if you need to pay IRD Tax. Refinancing for a short period to allow you time to sell without the dreaded “Mortgagee Sale” tag is also an option, as mortgage advisers, we can help you to understand the financial steps and bridging period needed when waiting on the sale of your existing home.  

With good equity, there is usually a way we can help. The lenders we partner with will offer bridging products, with terms of 6 to 12 months. Bridging finance is available for residential property, in your personal names or a Trust, also rental investments, and commercial and lifestyle properties. Having strong equity may allow some or all of the interest to be included in the loan, which can help meet the lender’s servicing criteria. 

The 5 questions we are most often asked on Bridging Finance in New Zealand.

A. Usually the cost of interest on an existing Home Loan and Bridging Finance is high and unaffordable, especially if the sale of your home is drawn out. 

A. If you are unable to sell your home, the interest costs may deplete your savings 
and force you to sell your existing or new home at a much discounted price. 

A. Closed”  bridging finance is when you have sold your home unconditionally, with a fixed settlement date and ideally a 10% deposit paid. 

A. This is where you are yet to achieve a sale of your property or the sale is not unconditional. 

A. Bob and Mary entered into an agreement to purchase a lifestyle block south of Auckland for $1.5m. Their finance date and settlement date were within a few weeks of each other. Bob and Mary were aware that there was a lot of interest in the property and approached First Rate Mortgages and Non-Bank for a solution.  

They had a pre-approval from their Bank however this was subject to them selling their owner-occupied home, “closed” bridging finance. Time was running out – a phone call with a Lender enabled us to provide a win-win solution for Bob and Mary.  

Our Lender got in his car and met clients at their properties. Within 24 hours he was able to provide two first mortgages over their new purchase and their existing property which were owned by their Family Trust. 

Bob and Mary have now sold their own home and we are looking at refinancing the residual lending to a mainstream Bank.  

Our clients are so happy as without “open” bridging finance they would have missed out on buying their dream home.  

If you would like to know more about bridging finance with Non Bank lenders, then give us a call today. We will chat about what you would like to do and see if we can find an effective solution that fits your personal circumstances.